The European Union (EU) has appointed the Development Bank of Southern Africa (DBSA) as its fund manager for a €100-million programme designed to accelerate the preparation of social and economic infrastructure projects in South Africa and the broader region.
Known as the Infrastructure Investment Programme for South Africa (IIPSA), the fund specifically aims to move priority energy, transport, water, information and communications technology, education and health projects from “concept to bankability”.
EU Head of Delegation to South Africa Ambassador Roeland van de Geer said on Thursday that it had taken two-and-a-half years to establish the fund, while the DBSA had been selected as its implementation agent because its mandate and skills set were closely aligned with the objectives of the fund.
Van de Geer added that the aim was to leverage the work done under the aegis of the IIPSA to crowd in public, development and private finance to begin dealing with the growth-constraining infrastructure backlogs in South Africa and Southern Africa.
No conditions had been placed stipulating involvement by EU firms in either the project-preparation work, or in the eventual projects. But the EU would insist on open and transparent processes – conditions that tended to suite European companies.
The projects pursued would be those prioritised by the South African government through the National Development Plan and the National Infrastructure Plan, which envisages the deployment of R3-trillion of social and economic infrastructure over the coming 20 years.
DBSA CEO Patrick Dlamini indicated that a request for proposals would be issued in early April and that the steering committee overseeing the fund was hopeful that the first disbursements would be made in the not too distant future.
He described the absence of bankable projects as a major constraint to the roll-out of infrastructure in South Africa and the rest of the region and argued that IIPSA could play an important role in alleviating that problem.
Besides project preparation, the fund could also be used to stimulate further cofunding for those projects that required additional support to be moved into the implementation phase.
Besides the direct financial input from the European governments, IIPSA is also being backed by the European Investment Bank, Germany’s KfW, the Agence Française de Développement and the UK’s Department for International Development.
The blended finance model could, Van de Geer said, become an important model for the EU’s engagement with other middle-income countries in future and it would, thus, be paying close attention to its effectiveness in South Africa.